Nucor Stock has been in my Put Selling US Stock portfolio since 2010. Nucor stock symbol is NUE. It’s exciting when a stock makes new 52 week highs but it has to also be taken into context. Investors need to ask themselves why Nucor Stock is moving higher? In this case it is the perception that if indeed the economy is improving then Nucor’s revenues will grow. If that is the case then Put Selling at higher strikes would be warranted but only when a new trading pattern develops and new support levels are established.
Nucor Stock Management Announce Better Expected Returns
Recently, Nucor’s management announced they are expecting better returns for the third-quarter earnings. They indicated that they are seeing an improvement in demand coupled with supply disruptions experienced by its competitors. They also mentioned that its raw materials segment would likely report weaker results than in the second quarter because of higher start-up costs at its new Louisiana iron plant which converts natural gas and iron ore pellets into direct reduced iron for scrap metal which is primarily used for steel products in electric arc furnaces.
They are expecting third-quarter earnings of between 35 to 40 cents compared to 35 cents for the same quarter last year. Analysts, on average, are expecting 38 cents a share.
Steel Maker Concern Over European Practices
It was just back at the start of August that steel makers were expressing concern about European unfair trade practices. Indeed in August a group of US steel pipe producers launched one of the biggest steel trade cases in years by asking the US International Trade Commission to stop what they see as a flood of unfairly traded products from nine countries. In a letter from the Steel Manufacturers Association (SMA), to the chief US trade negotiator and presidential advisor Michael Froman, they wrote “The European governments should be encouraged to take steps to curb their own excess steel capacity.” They concluded by saying “The United States cannot be the dumping ground for other countries’ excess supply.”
This was part of the reason for the sell-off in steel companies stock, including Nucor Stock back in August. While Nucor Stock has recovered, this concern remains and could impact revenue and subsequent earnings in upcoming quarters.
Put Selling Safely The Rise In Nucor Stock
With any rise in a stock it is tempting to be Put Selling as the stock pushes higher. Looking at the Nucor stock chart since November 2012 I believe there are only two choices for Put Selling the rise in Nucor Stock.
1) Put selling two strikes lower and buying back as soon as the stock turns sideways and even hints that it is about to turn back down. This can be done by watching the daily candles. Once a new high is no longer established the stock will turn sideways. That will be the first clue. The second clue is when the stock has a lower low than the previous day low. That is when I would be buying back any puts that I had sold.
2) Personally looking at the Nucor Stock chart below I think the top end for Put Selling based on volume has to be $47. Even at $47 there is not a lot of support in Nucor Stock. The better support is still sitting at $45.00. If an investor was Put Selling against the $47 strike I would roll down to $46 the moment the stock pulled back and hit $47.
Put Selling Rise Of Nucor Stock Summary
One of the prime reasons for having a watch list of stocks is to have stocks to continually be Put Selling against when other stocks reach heights that make Put Selling safely too difficult. When the goal is not to be assigned shares it rarely makes sense to chase stocks that are in a questionable rise. If Nucor Stock earnings come out in the quarter at the low end, then there is a good chance Nucor Stock will pull back which is the better time to be Put Selling against this stock.
If picking any Nucor Stock put strike to be Put Selling against I think only $47 is at the top end. Even this morning the $47 put strike for Oct 19 expiry could be sold for .44 cents. Personally I will not chase this stock higher. I sell puts against stocks that have good trading ranges with definable support levels. You can clearly see in the chart that at $50.00 and above there is no support in Nucor stock. This tells me that the chance of ownership is too high to warrant Put Selling and it is time to look elsewhere until Nucor stock either establishes a new trading range which can be safely put sold against or it falls back to the trading range identified previously.
Nucor Stock Internal Links
Review Nucor Stock Trades For 2013
Review Nucor Stock Trades For 2012
Review Nucor Stock Trades For 2011
Review Nucor Stock Trades For 2010
Review all articles about Nucor Stock
Review all Members only articles about Nucor Stock